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Fired Broker Sues CSFB, Quattrone

July 13, 2002|From Bloomberg News

Credit Suisse First Boston and Frank Quattrone, the head of its technology group, were sued by a brokerage executive who claimed he was made a scapegoat in a probe of how the firm handled initial public offerings.

John Schmidt, who had been head of private client operations at the firm's San Francisco office, said in a lawsuit that he was penalized by Credit Suisse for methods of allocating IPOs that were common throughout the firm. Quattrone deflected blame to him and two other brokers who were fired, Schmidt said.

Credit Suisse in December agreed to pay $100 million to settle regulatory charges that it allotted sought-after shares of IPOs in exchange for investor kickbacks in the form of higher commissions. Firing Schmidt was part of a strategy to blame a "rogue operator" for any wrongdoing, the suit claimed.

"CSFB dealt Schmidt the same contemptuous, unethical and illegal hand it dealt its customers and clients," said the suit, which was filed in state court in San Francisco and seeks unspecified damages for defamation, breach of contract and wrongful discharge.

"We believe the allegations have no merit and intend to defend ourselves vigorously against them," Victoria Harmon, a spokeswoman for Credit Suisse, said. Quattrone couldn't be reached for comment.

Schmidt is represented by Thomas Girardi, founding partner of Los Angeles-based law firm Girardi & Keese.

Girardi declined to comment beyond the lawsuit.

Schmidt, who was head of private client services in San Francisco, was fired in June 2001, along with Michael Grunwald, the top salesman under Schmidt, and Scott Bushley, a junior-level employee.

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